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What Is a Consolidated Settlement?

A consolidated settlement is a set of financial statements prepared by treating a parent company and its group companies, such as subsidiaries, as a single economic entity.

What kind of settlement this is

A consolidated settlement prepares a balance sheet, income statement, and related statements for the entire group — including subsidiaries the parent controls and affiliates over which it has significant influence. Transactions within the group, such as sales between a parent and its subsidiaries, are eliminated, so only transactions with parties outside the group are reflected.

Points to watch when reading it

Earnings materials sometimes present both "consolidated" and "non-consolidated (standalone)" figures side by side. For companies where subsidiaries account for a significant share of overall performance, the consolidated and non-consolidated figures can differ noticeably, so it helps to be aware of which figures you are looking at.

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Frequently Asked Questions

How does a consolidated settlement differ from a non-consolidated (standalone) settlement?
A non-consolidated settlement shows the financial position of a single company on its own, while a consolidated settlement shows the financial position of the entire group, including subsidiaries controlled by that company. In earnings announcements by listed companies, it is generally the consolidated figures that receive the most attention.
Why is a consolidated settlement given so much emphasis?
Many companies spread their business activities across group companies, so the parent company's standalone figures alone are often not enough to capture the full picture of the group. Consolidated figures serve as an important source of information for investors assessing the earning power and financial condition of the group as a whole.

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